%1

Bankruptcy Judge Kevin Gross yesterday confirmed Verso Corp.’s bankruptcy reorganization plan, clearing the way for the beleaguered papermaker to emerge from bankruptcy, the Portland (Maine) Press Herald reported today. The confirmation order was signed less than five months after Verso and its subsidiaries filed for chapter 11 protection in late January. If Verso follows the reorganization plan as written, all of its pre-bankruptcy debts will be erased. New common stock will be issued to creditors that were owed money by Verso and its NewPage subsidiary before the bankruptcy. When that happens, Verso also must take the necessary steps to have its shares once again listed on the New York Stock Exchange. Verso’s stock was delisted in September because its share price fell below the required $1 minimum.

Corinthian Colleges, once one of the nation’s largest for-profit education companies, engaged in apparently unlawful practices by paying its recruiters based on how many sales leads they converted into actual students, according to documents unsealed late last week, the New York Times reported today. The disclosure may make it easier for former students of the defunct institution to have their federal loans forgiven by helping them establish that they were defrauded or that Corinthian violated federal law while it was operating. The materials, released by a three-judge panel in the U.S. Court of Appeals for the Ninth Circuit, are internal Corinthian documents known as “Ad Rep Performance Flash Reports.” They were originally provided by two former employees who sued Corinthian and its auditor in 2007. Most of the documents the employees produced in the case — almost 800 pages — remain under seal. The filing also contains a sworn affidavit filed by Nyoka June Lee, one of the former Corinthian employees, who stated that her compensation was based upon meeting enrollment quotas. “Making my numbers was the only requirement to get a raise,” Lee said. Read more. 

Listen to a podcast looking at the Corinthian Colleges Case and the appointment of a student creditor committee. 

The Roman Catholic Diocese of Gallup, N.M., on Tuesday won court approval of its plan to compensate clergy sexual abuse victims, paving the way for it to exit bankruptcy, the Wall Street Journal reported today. Following a hearing at the U.S. Bankruptcy Court in Albuquerque, N.M., Bankruptcy Judge David Thuma signed off on the $25 million plan, which is largely funded by contributions from the diocese, insurance carriers, parishes and sales of the diocese’s property. The bulk of the funds will be used to compensate victims, according to Susan Boswell, the diocese’s lawyer. Fifty-seven victims filed claims against the diocese, though not all will receive a payout because of prior settlements. In return for victim compensation, the plan provides legal protections for the diocese and the other contributors that will shield them from future lawsuits tied to past abuse.

Bankruptcy Judge Benjamin Goldgar allowed the casino operating unit of Caesars Entertainment Corp. to begin seeking creditor votes for a plan to exit its long and contentious $18 billion bankruptcy, Reuters reported yesterday. A confirmation hearing will begin on January 17, 2017, two years after the company filed for chapter 11 protection. The bankruptcy of Caesars Entertainment Operating Co. (CEOC) has been rocked by creditor accusations that the nonbankrupt Caesars parent looted its operating unit of choice hotel and casino assets before the latter's January 2015 filing for chapter 11 protection. Caesars has denied wrongdoing. It offered to contribute roughly $4 billion to CEOC's bankruptcy plan to settle the allegations after an independent examiner said it could be on the hook for up to $5.1 billion. Following intense negotiations with creditors, CEOC lawyers said yesterday that they have made "significant progress" in obtaining pledges of support for the reorganization plan, which will slash $10 billion of debt and split the unit into a new operating company and a real estate investment trust.

Lawyers for Hulk Hogan say creditors of Gawker Media Group, not new owners of the online publishing operation, should have the right to sue suppliers in Gawker’s bankruptcy case, the Wall Street Journal reported today. The former professional wrestler, whose real name is Terry Bollea, filed a challenge to Gawker’s plan to sell itself to Ziff Davis or a higher bidder at a bankruptcy auction on the grounds the sale unfairly trades away potentially valuable rights. Bollea won a $140 million judgment against Gawker and its CEO Nick Denton due to the release of a sex tape, pushing the company to file for chapter 11 protection. Ziff Davis has offered to buy the Gawker publications, which publish “news, scandal and entertainment” under such banners as Gizmodo, Jalopnik and Jezebel. The $90 million offer will be tested at a bankruptcy auction under rules to be established by a New York bankruptcy judge later this month. Money from the sale will go to pay off Gawker’s creditors, including Bollea, the company’s largest creditor. Bollea’s lawyers filed papers on Monday protesting Gawker’s “stalking horse” deal with Ziff, which will serve as the starting bid for the bankruptcy competition. The objection focused on the inclusion of “avoidance actions” as part of the package of assets being sold.

The Denver Broncos have the U.S. Bankruptcy Court’s permission to cancel their sponsorship contract with the bankrupt Sports Authority, the Denver Post reported today. Under the agreement, the exclusive “retail sporting goods” sponsor of the Broncos was granted a non-exclusive license to use the team’s trademarked logo in places such as websites, advertising and in-store signs; advertisements and signs. The deal also gave the retailer hospitality benefits such as box seats and Super Bowl tickets. Sports Authority’s sponsorship contract, which expires in 2035, is valued at more than $55.3 million, court records show. The company owes the Broncos $36 million. Separate from the sponsorship agreement, Sports Authority has a contract with the Denver Metropolitan Football Stadium District for the naming rights to Mile High Stadium, the Denver Broncos’ home field. Sports Authority is in the process of auctioning the naming-rights contract and has enlisted Hilco Streambank to find buyers for that agreement and for its intellectual property, including customer databases, private-label brands and domain names. But the stadium district filed a protest in bankruptcy court seeking first right of refusal if Sports Authority finds a new naming sponsor. Hilco Streambank has set a 3 p.m. June 27 deadline for bids on the intellectual property assets. The U.S. Bankruptcy Court in Wilmington, Del., has set an auction date of June 29 for some Sports Authority store leases and other remaining assets.

Maxus Energy Corp.'s deal with its corporate parent, YPF SA, over who is on the hook for the cleanup of New Jersey's contaminated Passaic River hit a hurdle on Monday in bankruptcy court, Dow Jones Newswires reported yesterday. Occidental Chemical Corp., Occidental Petroleum Corp.'s chemical subsidiary also known as OxyChem, is balking at Maxus's proposed environmental settlement with YPF and the subsequent bankruptcy filing. At issue is a deal that calls for YPF to provide Maxus with $130 million in return for Maxus dropping any "alter ego" claims it may have against its parent for cleaning up the river. Maxus filed for bankruptcy on Friday, days before OxyChem was slated to head to court in New Jersey over litigation seeking to put YPF on the hook for Maxus's environmental obligations. OxyChem purchased part of Maxus's business in 1986.

The U.S. government agency created after the 2010 Deepwater Horizon oil spill plans in coming weeks to unveil tougher financial requirements for offshore oil producers aimed at protecting taxpayers from the risk of cleaning up abandoned oil rigs, Reuters reported yesterday. Under the new guidelines, the Bureau of Ocean Energy Management (BOEM) will demand additional guarantees to cover producers' legal obligation to plug offshore wells and dismantle rigs in the Outer Continental Shelf once they have extracted oil and gas, according to Renee Orr, chief of Strategic Resources at the agency. Currently, companies are exempt from providing supplemental bonds for the cleanup-process, known as decommissioning, if the total estimated liability is less than half of their net worth. The stricter bonding rules, which will demand more capital of more companies, were proposed by the federal agency in September and will be implemented this year, Orr said. They follow more than 80 bankruptcy filings by North American oil and gas producers since the beginning of 2015, when plunging oil prices gripped the sector, triggering concerns at the agency that companies would walk away from clean-ups. Read more. 

Listen to a panel of experts drill down through the issues involved in an oil and gas bankruptcy at ABI's 23rd Annual Northeast Bankruptcy Conference on July 14-17 at the Omni Mount Washington Resort in Bretton Woods, N.H. Register here.

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition.